Industry News

London world's most expensive again 18th March 2016

London continues to the lead the pack when it comes to the world’s most expensive cities to live and work, with the cost of accommodating an employee in UK’s capital more than four times the cost of accommodating the same worker in Berlin, reports Savills.

Acording to Savills’ Live/Work Index, which measured the combined cost of residential and office space per person per year across 20 cities, the average total cost of accommodating a worker is US$56,855.

However, due to London, the average cost across the four European cities analysed is $63,800, ranging from $112,800 in London, followed by Paris at $78,200, Dublin at $36,500 and Berlin at $27,700.

The report says that while they are still relatively cheap compared to their peers, both Dublin and Berlin have seen significant increases in costs since 2010: accommodation overheads in Dublin have increased by 28% and Berlin by 20%, whilst in London they are up by 18%. Paris, meanwhile, has seen an increase of only 1%.

Since the global financial crash recovery in Europe’s real estate markets has not been universal, but rather concentrated in the cities favoured by occupants and investors in the growing digital and creative economies, says Savills. This means some relatively small cities, such as Berlin (population 4.3m) and Dublin (1.7m) are fast moving into the realm of world class city status and competing with the giants in a new digital age. With the magic formula of high quality urban environment, favourable regulatory environment and low property costs, Berlin and Dublin have emerged as havens for Gen Y, footloose creative talent.

Berlin’s offer is dominated by online, e-commerce and software-driven tech, from music cloud storage platform Soundcloud, to the early stage incubator Rocket Internet. In Dublin, Ireland’s corporate tax rate of just 12.5% initially made it an attractive location for large US tech firms for their European headquarters, such as Google, Facebook and LinkedIn.

Real estate investment deals in Dublin hit US$3.8bn in 2015 – up 7,113% on 2009 when activity was at a low due to the GFC – whilst in Berlin they reached $12.5bn – up 455% in the same period, according the latest research from Savills.

The agent believes the digital industry has fuelled job growth in both cities. The number of jobs in the information and communication sector grew by 23.3% in Dublin between 2005 and 2015, at a time when total employment in the city increased by just 3%. Further growth of 25.9% is forecast in the next ten years. Berlin saw similar levels of employment growth in the sector, up 20.5% in the last decade, against a Eurozone average of 9.8%.